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Loans Held for Sale | 12 Months Ended
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Dec. 31, 2022
Loans Held For Sale |
Loans Held for Sale | 3) Loans Held for Sale The Company elected the fair value option for loans held for sale. Changes in the fair value of the loans are included in mortgage fee income. Interest income is recorded based on the contractual terms of the loan and in accordance with the Company’s policy on mortgage loans held for investment and is included in mortgage fee income on the consolidated statement of earnings. There aren’t any loans that are 90 or more days past due and on a nonaccrual status as of December 31, 2022. See Note 17 of the Notes to Consolidated Financial Statements for additional disclosures regarding loans held for sale. The following table presents the aggregate fair value and the aggregate unpaid principal balance of loans held for sale. Schedule of Aggregate Fair Value Loans Held for Sale
|  | 2022 |  |  | 2021 |
|  | December 31 |
|  | 2022 |  |  | 2021 |
Aggregate fair value |  | $ | 141,179,620 |  |  | $ | 302,776,827 |
Unpaid principal balance |  |  | 141,337,811 |  |  |  | 294,481,503 |
Unrealized (loss) gain |  |  | (158,191 | ) |  |  | 8,295,324 |
Mortgage Fee Income Mortgage fee income consists of origination fees, processing fees, interest income and certain other income related to the origination and sale of mortgage loans held for sale. Major categories of mortgage fee income for loans held for sale are summarized as follows: Schedule of Mortgage Fee Income for Loans Held for Sale
|  | 2022 |  |  | 2021 |
|  | Years Ended December 31 |
|  | 2022 |  |  | 2021 |
Loan fees |  | $ | 24,184,972 |  |  | $ | 37,723,433 |
Interest income |  |  | 9,666,149 |  |  |  | 9,385,469 |
Secondary gains |  |  | 153,870,807 | (1) |  |  | 230,417,029 |
Change in fair value of loan commitments |  |  | (4,308,638 | ) |  |  | (3,113,095 | )
Change in fair value of loans held for sale |  |  | (8,834,797 | ) |  |  | (8,783,376 | )
Provision for loan loss reserve |  |  | (1,078,812 | ) |  |  | (2,211,230 | )
Mortgage fee income |  | $ | 173,499,681 |  |  | $ | 263,418,230 |
(1) |  | Includes a net gain of $34,051,938 for the sale of mortgage servicing rights
Loan Loss Reserve When a repurchase demand corresponding to a mortgage loan previously held for sale and sold to a third-party investor is received from a third-party investor, the relevant data is reviewed and captured so that an estimated future loss can be calculated. The key factors that are used in the estimated loss calculation are as follows: (i) lien position, (ii) payment status, (iii) claim type, (iv) unpaid principal balance, (v) interest rate, and (vi) validity of the demand. Other data is captured and is useful for management purposes; the actual estimated loss is generally based on these key factors. The Company conducts its own review upon the receipt of a repurchase demand. In many instances, the Company is able to resolve the issues relating to the repurchase demand by the third-party investor without having to make any payments to the investor. SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Years Ended December 31, 2022 and 2021 3) Loans Held for Sale (Continued) The loan loss reserve, which is included in other liabilities and accrued expenses, is summarized as follows: Summary of Loan Loss Reserve Included in Other Liabilities and Accrued Expenses
|  | December 31 |
|  | 2022 |  |  | 2021 |
Balance, beginning of period |  | $ | 2,447,139 |  |  | $ | 20,583,618 |
Provision for current loan originations (1) |  |  | 1,078,812 |  |  |  | 2,211,230 |
Charge-offs, net of recaptured amounts |  |  | (1,800,284 | ) |  |  | (20,347,709 | )
Balance, at December 31 |  | $ | 1,725,667 |  |  | $ | 2,447,139 |
(1) |  | Included in Mortgage fee income
The Company maintains reserves for estimated losses on current production volumes. For the year ended December 31, 2022, $1,078,812 in reserves were added at a rate of 3.19 basis points per loan, the equivalent of $319 per $1,000,000 in loans originated. This is a decrease over the year ended December 31, 2021, when $2,211,230 in reserves were added at a rate of 3.9 basis points per loan originated, the equivalent of $390 per $1,000,000 in loans originated. In February 2021, SecurityNational Mortgage executed a settlement agreement with Lehman Holdings in relation to two adversary proceedings wherein all mortgage loan related claims were resolved, thereby ending all liabilities asserted by Lehman Holdings and conclusively ending all proceedings between SecurityNational Mortgage and Lehman Holdings. The full amount of SecurityNational Mortgage’s settlement payment was accounted for in the Company’s loan loss reserve as of December 31, 2020 and was paid during the first quarter 2021. The unique nature of COVID-19 creates significant difficulty for forecasting potential future losses. The Company will continue to monitor data and economic conditions in order to maintain adequate loss reserves on current production. Thus, the Company believes that the final loan loss reserve as of December 31, 2022, represents its best estimate for adequate loss reserves on loans sold. SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Years Ended December 31, 2022 and 2021

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